You don’t need all those accounts!
Over the course of my career I’ve seen many different situations with clients - no two are the same. But some of the hardest are when there are just too many accounts… often people will open another CD or savings account to get a better rate, have checking accounts at multiple banks for security, or have multiple retirement accounts because they failed to roll them over. But as you age, you should simplify and consolidate your accounts. It is the biggest piece of advice I can give! (Along with getting a power of attorney, updating your estate documents, and designating a person to be contacted if your Long Term Care policy isn’t paid!)
Tax season is a main reason to consolidate accounts. It’s easier to track down statements and keep track of them, as well as lessen the amount you have to pay your accountant to review and input them, if there are fewer accounts or if they are all at one financial institution.
Death - whether those accounts are in joint names or just one spouse, it is twice as much work after the death of a husband or wife for that surviving spouse to get account titles changed over, plus if the accounts don’t have a beneficiary or are only in the deceased’s name, it can mean you have to open an estate account, extra time, work, and most importantly, cost!
Scams - Maintaining a large number of open accounts increases the risk of them being compromised by cyber threats. It is essential to regularly monitor these accounts, which can be a lot. Constantly checking them, making sure any
I had a client that had 38 accounts. She hadn’t kept track of the mail so we had to start from scratch going through each account and calling or logging in to get statements. Because some were only in her husband’s name and he had passed away, it was extra steps - extra time and money. It took forever to track down the information needed to file a tax return. And that’s to say nothing of working through changing the names and transferring funds to her.
Having only a few accounts allows for easier beneficiary management and planning for the future. A financial advisor can better see the whole picture if all the assets are at one (preferably) or two institutions. Social security and pension payments can be deposited into the same account that is used for paying expenses, allowing for a seamless cash flow. Rather than having to name beneficiaries at multiple banks and then worrying that they don’t all align with your wishes.
Lastly, you make it easier for your loved ones to help you when the time comes. It isn’t fair to a friend or adult child to have to track down accounts at many different banks, close a dozen credit cards, or reach out to services like compushare to get access to funds. Less is more when it comes to accounts!
(And to jump back to what I touched on, if you or a loved one has a long term care insurance policy, make sure not only that it is on autopay, but that you’ve named a trusted friend to be notified if premiums aren’t paid. It can be a life changing mistake if you let that policy lapse due to non-payment!)
